Bookkeeping Foundations (Bookkeeping I)

Gain vital business skills in bookkeeping. This course is ideal to establish great accounting practices ensuring the financial health of a business. Brush up on your skills or study to improve your work in an accounting or administrative department.

Describe the use of a drawing account, and how drawings are classified in the balance sheet

Describe the functions of an analysis chart include an example using transactions to show A, L and OE.

Prepare a T form Balance Sheet.

Describe a Cash Receipts and Cash Payments journal their uses and their source documents.

Differentiate between a general ledger and a special journal.

Outline the benefits of a multi-column cash journal and a simple format cash journal.

Design a cash payments journal and a cash receipts journal. Describe the functions of posting references and sundry columns. Post items to a cash receipts and cash payments journal.

Explain the difference between a ‘discount allowed’ and a ‘discount received’

Describe the difference between a credit sale and a credit purchase and state the source documents. Prepare a credit fees/sales and a credit purchases journal and do a range of appropriate postings.

Describe the role and usefulness of a Subsidiary Ledger.

Outline the role and usefulness of a ‘Debtors Control’ account.

Show the double entry of goods bought on credit.

Describe a Control Account

Describe the aim of a general journal and its key sections. Change a general journal to accommodate subsidiary ledger. Correct errors in a general ledger account.

Explain the term bad debt. Use the general journal to record a bad debt. Understand ‘cents in the dollar’ offer in relation to a bad debt. Write off bad debts. Prepare a general journal. Record entries to a general journal. Know how the general journal is used in preparing closing entries. Set up a general journal. Close off a general journal.

Explain the term and use of ‘Contra Entries’

Record non-current assets in a purchases journal

Know the difference between closing and balancing a general ledger account.

Identify which ledgers are closed off at the end of the accounting period.

Describe a profit and loss account and how to work out a net profit or a net loss. Know which account does the net profit or loss is transferred to.

Describe a profit and loss statement and how it relates to the balance sheet.

Know why functional classification and segmentation used on profit and loss reports

Describe extraordinary expenses and how they are listed on the profit and loss statement and why.

Describe ‘Materials on Hand’ calculate materials on hand. State how they are reported on the profit and loss statement. Prepare a profit and loss statement.

Describe the difference between cash accounting and accrual accounting.

Describe Balance Day Adjustments and their importance to bookkeeping.

Describe pre-paid expenses and outline the difference between the asset and expense approaches to the recording of prepaid expenses.

Describe the importance of reversing entries and when they are done.

Know a range of common balance day adjustments.

Prepare a Trail Balance for a business that carries stock and has balance day adjustments. Create general journal for adjusting entries; Post the entries to the relevant general ledger accounts. Close off the accounts to profit and loss. Prepare a new trial balance; Prepare the profit and loss statement; Prepare the balance sheet.

Enter reversing entries for the new accounting period.

Outline the usefulness of a 10 column worksheet.

Make entries into a cash book and present a reconciliation statement.

Draw up and use a petty cash book.

Describe bank reconciliation statements and their use.

Describe methods of cash control; describe liquidity and its link to cash flow.

Outline the importance of budgets to a business; describe a range of budgets.

Describe the term ‘safety margin’.

Describe the term ‘cash budget’ and outline how debtors and creditors are included.

Describe a range of variances in a budget.

Describe the importance of budget reviews.

Bookkeeping Makes Business Management So Much Easier

Bookkeeping provides a framework for the collection, preparation and recording of financial data from which information can be drawn, so that informed decisions can be made, implemented and evaluated.

The bookkeeping system can be tailored to the needs of any individual, non-profit organisation, small or large business. This course will concentrate on the needs of small business. A business is an economic entity created for the purpose of increasing the wealth of its owner or owners by generating profits from the provision of goods and/or services. A small business is one where all major decisions are the responsibility of one, two or a few people who are usually the owners.

A business can help control its financial future through its bookkeeping system. Information relating to financial transactions can be used to prepare budgets and set future financial goals. Businesses need this information to help answer a number of questions, such as:

Will the business have enough cash to pay its bills?

How much are the assets of the business worth?

Can the business afford to borrow money?

Is the business financial enough to expand its operation?

Should the selling price be changed?

Using Bookkeeping as a Management Tool

When a manager has access to well-kept books they can use these as a tool for future business planning and in order to make timely and considered decisions. They can see at a glance whether the business is making a profit or a loss, how much money is owed to creditors and how much is owed to the company by debtors. The can determine by using this information whether all is going to plan and decisions can then be made around that information. For example if sales are down should prices be dropped? Can the wage bill be met? Is downsizing an option to consider? Conversely, if sales are up decisions to expand the business may need consideration. How much would it cost to expand? How much extra money would it take to cover expansion costs? And so on.

Accounting conventions (accounting standards) and doctrines (principles) influence accounting and (therefore bookkeeping) practices. If you understand accounting conventions (i.e. the basic rules and principles) you it will give a greater and clearer understanding of why statements are prepared in a certain way.

Accounting standards were commonly accepted accounting practices many of which have now become laws which accountants must follow.

Due to international cooperation (spanning decades of work) accounting standards i.e. the rules which govern the ways in which books are kept and reports are presented, have become standardised (i.e. can be easily recognised through similarities in approach and presentation) throughout many countries.

What are These Conventions?

There are many conventions (rules) which cover a range of situations using accepted accounting methods (conventions). The most important used by bookkeepers include the following:

The historical cost convention
As with all basic accounting this rule deals with what has happened in the past (within a business). It is possibly the most commonly used accounting convention. Transactions for assets within the business must be recorded at their original cost i.e. the amount paid at the time of purchase less depreciation (if applicable). With some exceptions, for example land which commonly (but not always) appreciates with time, the value of an asset cannot increase - i.e. Inflation or the amount an item could potentially be sold for, are not taken into account. This can have the effect of distorting the true value of a business on the balance sheet – for example a business may buy a warehouse for $150,000. 10 years later the business owner may have an offer of $300,000 for the same building. On the balance sheet however it still has to appear at its original cost. This is because values are nebulous i.e. you can’t really predict the future value of anything and it is deemed a better approach to record historical value then it would be to guess at a market value. Assets however can from time to time be re-valued to reflect their current worth and appear on the balance sheet with the new value (noted on the balance sheet).

The business entity convention
This separates the business owner (of any type of business entities) from the business, in accounting terms. So any transactions within the business, relate to the business and not to the owner (e.g. when a business owner invests money into the business, it is recorded as a liability that the business has to the owner. If the owner buys withdraws cash (or takes home goods) it is not recorded as a business expense. The owner can’t use the purchase of goods (for private use) as a business expense. This rule ensures that the personal and the business dealings of the owners are always separated.

The going concern convention
This assumes that the business will continue its activities indefinitely and are therefore able to meet its current and future commitments. Because of this assumption, a business can classify assets and also liabilities as short, medium or long term and report them as such on the balance sheet; this prevents the write-off as costs of long term assets, within one accounting period, instead of over many years. This convention also allows assets to appear at book value (at purchase) rather than market value.

The accounting period convention
In order to compare past to present business performance we need to produce accounting reports for a business at meaningful intervals. The length of an accounting period may be a week, a month, a quarter, or a full year, but must not be any longer due to taxation requirements. It may be set to start and end on a certain date for example the 1st of July each year and end on the 30th of June each year – known as the ‘financial year’. Note: in some countries ‘financial years’ differ.

A business’s profit and loss account should show the expenses or the income relating to the period in which they were incurred or generated rather than when an account was paid or income was received. This system is sometimes also referred to as the accruals concept (see the definition given earlier this lesson. The net profit a business makes is therefore more realistic to a given period of time. Accruals are part of the bookkeeping process.

Monetary entity convention
This states that the monetary unit that is used is relevant to the country the business is operating in. In other words in the USA it is the US dollar and Australia the Aust. dollar in the UK the pound and so on.

Recognition of Law
Financial reporting in a business is accountable by law. Books must be kept correctly reports must be accurate and correctly reflect the financial transactions of a business.

Accounting Doctrines

Accounting is based on accounting conventions. The following are some generally used accounting doctrines. They differ from conventions in that they do not have to be adopted - but most companies choose to do so.

Consistency
This states that the way accounting information is presented (for a business) must remain the same for all accounting periods from the present and into the future. This ensures that performance comparisons are valid and equitable and there is less likelihood that financial information is manipulated or biased towards the user.

Relevance
All business transactions within the books and financial reports of a business must be relevant to that business only.

Materiality
All items that are of importance to a business (in a financial sense) must appear in a business’s financial reports. Conversely this means that small items that are of little significance to financial outcomes may be omitted. The way to test the importance of an item is to decide whether or not its omission with affect the reporting outcome and influence the reader’s or users perception of the true financial standing of a business. The omission of cents for example in a financial report would have negligible effect on ascertaining the true financial standing of a business.

Verifiability convention
A business (or anyone auditing the business) should always be able to confirm its figures. Any person should be able to look at the figures and use the data to come to the same conclusions. In order to do this a business needs to produce evidence of its business transactions in the form of receipts, invoices, bank statements, EFT (Electronic Funds Transfer) receipts and payments and cheque butts i.e. any documentation that was used to record transactions in the books.

What do you get when you enrol with ACS?

Orientation Video

Student Manual

Friendly & helpful Student Services Staff

Courses- Pathway to learning

Notes

Set tasks

Lesson aims

Assignments

Interactive self-assessment tests

E books

Text books

Course Notes

Student Room

Expert Tutor Support- telephone

and email support

HOW THIS COURSE CAN BENEFIT YOU

After this course you will be able to do most of the tasks that a professional bookkeeper does.

If you wish to begin working as a bookkeeper, this is all that is required to get started. The benefit of studying this course will be different for each graduate.

It may start you a a pathway to a new career.

It may make you more valuable to the employer you already work for.

It may help you start up or improve the profitability of your own business

It may help you manage your own finances better and significantly improve your own financial well being.

It will certainly improve your personal resume and make you more enlightened about managing money

Having the ability to organise finances is a valued skill, both in the workplace and at home.

ACS Student comment: "Yes it is [a valuable learning experience], it is challenging and in turn rewarding. I am getting an extensive knowledge of the field and am learning how to apply concepts in an easy way." Brei Huggins - Bookkeeping.

Does this sound like what you are looking for?

You can enrol right now - or if your have any questions, get in touch with our specialist tutors who will be happy to help you - use our FREE COURSE COUNSELLING SERVICE.

Need assistance?

Start Now!

Extensive international experience in business and finance. Chartered Accountant with 20 years experience in corporate and financial roles. David has a FCA, GAICD, B.Sc.Econ (Hons), Cert IV TAA.

Sonia Andrews

15 years experience in business, bookkeping and accounting.

Denise Hodges

Promotions Manager for ABC retail, Fitness Programmer/Instructor, Small Business Owner, Marketing Coordinator (Laserpoint). Over 20 years varied experienced in business and marketing. More recently Denise studied naturopathy to share her passion for healt

Sarah Edwards

Over 15 years industry experience covering marketing, PR, administration, event management and training, both in private enterprise and government; in Australia and the UK.

Business OperationsCovers things from running a business from finance and forecasting to staffing changes and legal issues. Chapters include: People, Law, Finance, Risk, Product Management, and Daily challenges.

Getting Work in a Modern WorldA realistic guide to getting a job or starting out in business. This is a must read; for students, parents, the unemployed, careers advisors or anyone interested in changing or forging a sustainable career.

Professional Practice for ConsultantsExplore becoming a consultant. This ebook contains chapters on how to be a consultant, packaging your services, delivering the services, building your resources, finding the work and getting the job, planning and ethics.

Starting a BusinessBusinesses don't need to fail! This is concise, easy to read, and alerts you to all of the things that commonly make a difference to business success or failure. Seven chapters are: “A Reality Check”, “The Product or service”, “Managing a Business”, “How

Secure online payments

Find us on:

Phone 07 5562 1088

International +61 7 5562 1088

The information given is for general information and should not be regarded as advice in any matter. ACS Distance Education disclaims all and any liability in relation to any act or omission which is
done in reliance to the information provided in this web site. While every effort is made to ensure that we display correct information on our website, errors can occur. ACS Distance Education disclaims liability or responsibility for orders or complaints arising from such errors, including
(but not limited to): pricing, fees and course requirements. ACS Distance Education reserves the right
to decline orders arising from such errors.